Modi and Economic Policy

In his first 100 days…

1. Public spending under assault to benefit the rich.

Despite rhetorical campaign promises of impending prosperity under a Modi administration, the past 100 days establish clearly that the key difference in economic policy from the preceding United Progressive Alliance (UPA) government is one of degree and not of kind. This is evident in the budget which signals a further withdrawal of the state from social investment, increasing privatization, and placing corporate interests at the center of all economic policies. Simultaneously neglect of the agrarian economy persists while rural India reels under the impacts of two decades of neoliberal policies that have resulted in mass dispossession, immiserization and a wave of farmer suicides.

The Modi administration has announced its intentions to slash expenditures that benefit the vast majority of the poor (in the name of fiscal responsibility) even while it does its best to transfer massive amounts of public funds to the rich (in the name of stimulating growth), easing the corporate acquisition of land even as millions face threats of eviction and dispossession as a result. Overall, the economic outlook is grim for the vast majority of Indians who face deprivation and marginalization while the rich have many reasons to celebrate.

Previously, in Gujarat…

1. Low wages, extreme income disparity and growing public debt

Wages in Gujarat were lower than the average rates throughout India. And though Gujarat’s per capita income is 20% higher than that of the rest of the country, rural wages are 20% lower and urban wages are 15% lower, evidence of pervasive inequality. Furthermore, compared to other states in India, wages of male casual labour in Gujarat are at the bottom of the scale in terms of the real incomes they generate. What often goes unmentioned about the Gujarat model is that recorded growth has been contingent on growing debt. The state’s debt increased from Rs 45,301 crore (USD 7.475B) 2002 to Rs. 1,38,978 crore (USD 22B) in 2013.